North America’s florists have been slowly losing their bloom. But for one perennial entrepreneur and his new team of industry innovators, the hope is that spring will see business blossoming once again.
The Ottawa group behind a new app called Nectar Flowers, which was launched just in time for Valentine’s Day, says the florist industry as a whole is marked by an inherent flaw – and they think they’ve planted the seed that will fix it.
The app lets customers quickly pick out a bouquet with just a tap on their smartphone and send it, along with a video message to capture the emotion of the affair, to a spouse, mother, friend or whomever.
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After a $250,000 funding round and potentially more investors on the way, chief operating officer Andriy Azarov has high hopes that the “florist on your phone” will be the solution to a number of industry problems with which he’s dealt over the last seven years.
When he came to Canada, Mr. Azarov got his start in the florist industry driving a truck for a local wholesale company, selling flowers to small shops around town. After a year, the native of Ukraine decided to start his own venture, so he picked up a copy of Web Design for Dummies and started building a portfolio of websites he could sell to local florists.
“It was a pre-Shopify kind of age, and pretty hard to get a nice-looking website with no money,” he says.
Half the flower shops he visited didn’t have a website, he recalls, but the recession made it a hard sell. In the meantime, he started trying out search engine optimization techniques he read about in the last chapter of his book. Then a funny thing happened.
“I was playing around, and then suddenly I started to get people ordering flowers from this portfolio website,” he says.
Mr. Azarov brought the orders to local florists he had gotten to know over the years. They delivered the flowers, and he took a piece of commission. It made him realize he could make a lot more selling his own flowers than he could by selling websites.
“Maybe (the decision) was wrong. Maybe I could be another Shopify,” he says with a laugh.
Still, it would be wrong to say Mr. Azarov hasn’t found success in his own right. In just a few years, he grew his company, CanaFlora, to $3 million in revenues with two distribution centres in Ottawa and Calgary.
That also set the course for his new venture, driven by the forward thinking of chief investor Andrew Waitman along with a “power team” featuring Mr. Azarov, technology lead Dan Gagliardi and marketing strategist Samer Forzley, a 2010 OBJ Forty Under 40 recipient.
“This guy intrigued me,” says Mr. Waitman, CEO of Assent Compliance and formerly the head of Pythian and managing partner at Celtic House Venture Partners. “You don’t hear about people starting florist businesses that often.”
After all, it’s not exactly an industry that’s thriving. While Canada’s $1.4-billion greenhouse flower industry has grown modestly over the last couple of decades, storefront retailers are in a more thorny situation as they struggle to compete with big-box grocers and online stores.
Only two-thirds of small and medium-sized flower businesses are profitable, and revenues are decreasing by one per cent annually, according to Statistics Canada. The floriculture industry continues to shrink at a similar rate in the United States, where the industry has wilted by 16 per cent since 2007, according to market research analysts at IBISWorld.
Mr. Waitman says he was impressed by CanaFlora’s success – but not as impressed as he should have been after sending a bouquet to a colleague for a test run. (His colleague never got the flowers he sent him.)
He says the flower delivery business as a whole is “flawed,” since it doesn’t allow the customer interaction and feedback loops that consumers in other old-time industries have come to value so highly.
“Why does FedEx allow you to track your package? Why does Uber succeed as well as it does? It’s because you know where the bloody cab is,” says Mr. Waitman. “If I get to see the actual flowers I’m sending, that’s a feedback loop. I get to see when the order’s arrived. The recipient gets to control where and when it delivers. So when you use technology to enable feedback loops, people have a much better experience.
“From Ecuador to the receiver’s door, you need to understand how to get flowers from the farm to the recipient, and Andriy understands that in spades.”
It’s probably more reliable than Mr. Azarov’s former strategy of rigging up his websites to fit Google’s algorithms and win page views. Among his tricks for increasing web traffic was creating a different website for each Canadian city – Rideau Florist here in Ottawa, for example – all acting as the local face of CanaFlora. After a few years, though, Google made adjustments and bumped those sites way down, dealing a critical blow to the company’s revenues.
“It was very good for us, and it almost killed us,” says Mr. Azarov.
In a Google search for “Ottawa florist,” CanaFlora shows up on the seventh page – much deeper in the results than most users are willing to go.
The top result is Ottawa Flowers, whose general manager is Pavel Bogdanov. He says garnering that level of web traffic for his business means creating unique and rich content and working with other local businesses to promote organic growth. It’s all about showing the customer something that’s unique and easy to buy, he says.
“More and more people like to see this stuff online for convenience, therefore fewer people are walking into stores,” says Mr. Bogdanov, who has run the award-winning company for more than 18 years. It’s crucial for today’s florists to “find a niche or get out” lest they lose business to larger competitors with greater reach and resources, he adds.
“If you’re trying the old-school flower shop approach of doing it all, you cannot be competitive and therefore you cannot be sustainable,” he says.
The idea behind Nectar is that users will find the app, download and install it on their phones, then use it any time they need flowers, rather than returning to Google every time there’s a special occasion or they find themselves in trouble with their significant other.
But it also needed features that would make customers enjoy the experience so much they would keep coming back, says Mr. Forzley. That’s why the app lets customers send flowers without even knowing the recipient’s address – the company will figure that out by checking the phonebook, finding their office address or just by contacting them to arrange a delivery – and include a video message that the recipient can likewise return with a thank-you.
“Flower buying is a very emotional thing,” says Mr. Forzley. “You might not know what to say because you’re not a good writer, but you can always articulate an emotion visually.”
Under its holding company, Beyond the Bloom, CanaFlora launched the app on the App Store and Google Play less than two weeks before Valentine’s Day, an occasion that brings in up to 30 per cent of CanaFlora’s annual revenues. Mr. Waitman says Feb. 14 and Mother’s Day are the perfect time to test out the app and learn from customers.
“Ultimately, if we can prove that there’s good take-up, we’ll go out and raise money and roll this out,” he says.
It could be a make-or-break move for Mr. Azarov, who predicts that while specialty florists like those that cater to weddings and other special events will survive, mom-and-pop flower shops will continue to wither away.
“Future development of technology is the dynamic we’ll see in the future,” he says. “It’s going to be less and less local florists and more and more online flower deliveries.”
If that’s true, that will likely mean more competition for Nectar. The company says it hopes to secure more funding in another investment round after Mother’s Day and keep expanding to become a dominant force in the country’s retail florist industry. Mr. Forzley says it’s hard to predict how the app will do before the Valentine’s Day rush, but the firm hopes to hit at least half a million dollars in revenues in 2015, and take it from there.
“There’s no No. 1 floral company in Canada,” says Mr. Azarov. “There’s no clear leader, but we think we have everything right now to become the No. 1 flower and gift delivery service in Canada.”